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Earnings

2Q 2019 Results Presentation

Bankia reaches halfway point of its Strategic Plan having practically fulfilled its goals of unlocking synergies and reducing stock of non-performing assets

Bank’s CEO, José Sevilla, acknowledges that the entity will not post earnings of 1.3 billion by 2020 year-end due to prevailing negative interest rates.

Communication Bankia

By  Communication Bankia

Publish on 
29 July 2019 - 13:00

Bankia has reached the halfway point of its Strategic Plan having practically fulfilled its objectives of unlocking synergies and paring back its stock of non-performing assets. Specifically, the bank had set itself a goal of generating 190 million euros in synergies through BMN's integration – a target that it has reached a year early. It also aimed to reduce its stock of non-performing assets by 8.9 billion euros by 2020, having achieved 78% of this objective.

The Strategic Plan also included distributing any surplus capital over and above the FL CET1 ratio of 12%. In line with this objective, the bank has organically generated 1.137 billion euros of capital over the last 18 months, which equates to 40% of the planned amount.

On the commercial side, Bankia established in its roadmap to increase the balances of business loans, consumer loans and investment funds, something which it has been making varying degrees of progress with.

With some things we are a little behind schedule and with others we are ahead of the game, but overall we are happy with the general parameters we set ourselves in the Strategic Plan.

José Sevilla
Bankia’s CEO

“With some things we are a little behind schedule and with others we are ahead of the game, but overall we are happy with the general parameters we set ourselves in the Strategic Plan”, said Bankia’s CEO, José Sevilla, during the press conference to present the second quarter results for the year.

In terms of its stock of consumer loans, the bank has boosted its market share by 10 basis points. “We are where we wanted to be with new loans and balances, with growth of around 15%”, highlights Bankia’s CFO, Leopoldo Alvear.

On the business loans side, compared to growth of 80 basis points by the end of the period, the bank has increased its market share by 70 basis points during the last 18 months. Meanwhile, the bank had intended to increase its share of the investment funds market by 80 basis points, but has only achieved a gain of 40 basis points over the last year and a half. “In terms of commercial activity, we are pleased with the progress made during the first half of the plan”, he adds.

Earnings of less than 1.3 billion euros

The current climate of negative interest rates is worse than envisaged when the Strategic Plan was drawn up, which will impede the bank from reaching its earnings target of 1.3 billion euros by the end of 2020 as was planned.

“We will not hit 1.3 billion euros”, Sevilla stated, indicating that analysts have been factoring in this assumption for some time. “It is not a surprise to the market that we will not hit this target”, he said.

Bankia’s CEO highlighted that the negative rates “are detrimental to the bank sector’s profitability” and reminded the audience that the Euribor slipped into negative territory in February 2016. Nonetheless, he stated that Bankia has been reacting to this scenario since launching the Strategic Plan by unlocking the synergies deriving from the merger with BMN and boosting revenues.

Sevilla also underlined that Bankia remains committed to distributing 2.5 billion euros to its shareholders by the end of 2020. Concerning the timing of pay-outs, he said that it should be the bank’s board who decide when is the best moment to distribute dividends based on “the bank’s health” and any market uncertainty.

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